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Who is pushing the cart?

Picking up grocery from store shelves was to customer’s job, then it shifted to third parties and now it is shifting to stores employees. Image credit: Getty images

The pandemic scare, and the lock-down, pushed people towards on-line shopping, also in areas where going to the shop in person used to be the norm. This is surely the case for groceries. In Italy we have seen grocery stores teaming up with delivery services (usually “riders”) to take the grocery to the doorstep of people, after they placed their order by phone or via Internet.

The home delivery service in Italy was already available but much more limited, both in the number of shops providing it and in the number of customers asking for it. In the US on-line grocery order was more pervasive and companies like Instacart leveraged on that demand. Instacart has recruited over 500,000 contractors that, through a platform, receive orders placed on line by customers and go shopping groceries on their behalf. Grocery stores don’t need to provide on-line service, nor delivery, they partner with Instacart to cover that part.

The boom of on-line shopping caused by the pandemic has multiplied the business of Instacart (that charges the store for handling this service, not the customer) that hired (or planned to hire) some 250,000 more contractors. However, the booming on-line business is convincing several stores that there is a business in on-line orders and deliver, and that this business is going to stay after the pandemic. 30% of Us families have got groceries on line (it was 12.5% in August 2019) and over 10% of all groceries are now sold on-line, twice as much as the amount in February 2020.  Hence, quite a few grocery stores are now getting organised to offer this service in-house, using their staff, thus cutting the fee charged by Instacart (9-10%). The result of this change is being felt by Instacart that has been forced in the last few months to reduce its contractors base (they are back to 500,000, the same before-pandemic number).

The shift to on-line orders and home-delivery services opens the door to the digital transformation of retail. So far, most shops turning to on-line orders and home delivery have done that to cope with the situation. Very little has been done to “leverage” on the situation.

Yet, moving from serving customers inside the shop to establishing a connection with customers to fulfil their needs brings onto the shop owners quite a bit of data, like, the shopper identity, place where groceries have to be delivered, suitable time range for delivery, products preferences (including frequency, association of products, shopping patterns…). In short the cyberspace connection creates data that can be analysed and transformed into service opportunity both to increase fidelity and to increase sales.

This is even more true for other types of merchandise. Only a few resellers have embarked on the Digital Transformation path as they have been forced to move to the cyberspace for selling their wares during the pandemic. Several kind of products can enable the generation of post sales services that are eased by the establishment of a connection between the reseller and the customer/user through the cyberspace.

Processes need to be changed, or at the very least re-tuned, and so the physical space. An on-line seller wants to streamline pick up of merchandise to decrease the time in the store, whilst a store having customers coming in for products selection should find a compromise between convenience (quick provisioning) and keeping the customer as much as possible in the store to solicit interest in the wares showcased. A shop where shopping is done by Instacart contractors pushing the cart is more a warehouse than a shop, one that is only serving on-line orders is most definitely a warehouse!

You see, in the end it really matters who is pushing the cart!

About Roberto Saracco

Roberto Saracco fell in love with technology and its implications long time ago. His background is in math and computer science. Until April 2017 he led the EIT Digital Italian Node and then was head of the Industrial Doctoral School of EIT Digital up to September 2018. Previously, up to December 2011 he was the Director of the Telecom Italia Future Centre in Venice, looking at the interplay of technology evolution, economics and society. At the turn of the century he led a World Bank-Infodev project to stimulate entrepreneurship in Latin America. He is a senior member of IEEE where he leads the New Initiative Committee and co-chairs the Digital Reality Initiative. He is a member of the IEEE in 2050 Ad Hoc Committee. He teaches a Master course on Technology Forecasting and Market impact at the University of Trento. He has published over 100 papers in journals and magazines and 14 books.

One comment

  1. Hello Roberto,

    thank for sharing your ideas. A potential next step. Via internet-connected refrigerators, customers have active smart-contracts with the supermarket to automatically re-order products of the basic needs. This way, the customers can focus on more specialized food, which they not buy on regular base.